Supply chains are a bit like the brakes in a car.
You don’t really notice them… until they’re not working.
This came home to me rather vividly when in the early days of the pandemic I had to visit 3 different supermarkets near my house to get all the items on my list.
Food supply chains are fragile things and they simply weren’t equipped to deal with the shift to everyone eating at home, leading to empty shelves.
Contrast this with what’s happened at Amazon and Apple since the pandemic started.
In rough terms, Amazon has increased its market cap by an astonishing $585bn since the pandemic started.
A lot of this gain has been driven by having the most robust supply chain in the world.
Demand for online shopping has exploded, Amazon Prime still delivers overnight without fail.
Speaking of Prime, most people credit the program with taking the business from a $45bn market cap to the behemoth it is today.
It was all down to getting the logistics right so that a million different items could be delivered within a day, profitably.
Similarly with Apple.
It’s no surprise that when Steve Jobs turned over the reins he selected the executive who’d revolutionized their supply chain, Tim Cook.(1)
Most people think of Apple as a consumer brand with flashy products.
At its core though it’s a manufacturing business that takes $550 worth of parts from 800 sites run by 200 suppliers and turns them into an iPhone 12 Pro that you’re willing to pay $1,100 for.
Those 50% margins are what drive its $2tn market cap and maintaining them requires a supply chain operating at peak efficiency.
So why don’t we focus on our legal supply chains?
I mean taking a hard look at who’s doing what work and how.
When we push clients on this point the honest truth is that most just haven’t taken the time to think about it.
This is not a good dynamic when most firms will say yes to any work that walks through the door.
It leads to inefficiency, inflated costs and blown deadlines.
What’s interesting is that when we talk to higher quality law firms they recognize that they’re often given the wrong type of work but are pushed by clients to persist in taking it on.
Ask me about the magic circle firm that complained to us that they were regularly being sent a volume of NDAs and commercial contracts…
I think there’s a better path for both clients and firms.
Step 1 – Establish what you’re sending out and why. Try to break it down as finely as possible in terms of matter types, importance to the business and internal stakeholders. It’s important to understand the motivations behind what’s been going on. Sometimes it’s ok to ‘over pay’ for advice if it helps you sleep at night; and sometimes it’s a waste; sometimes there’s no rhyme or reason at all.
Step 2 – Look at who’s doing the work at the firms. Many clients are amazed at the resources they’re actually paying for. For example, If the team handling your matters is very junior, that might indicate ways to modify delivery to improve value.
Step 3 – Talk to your firms and try issuing them a challenge. Looking at the whole portfolio of your external work, how would they reduce costs by 10 or 20%, or improve service delivery? I think high quality firms might surprise you with their answers. They’ve spent a lot of time and effort re-inventing their service delivery models to be more efficient. Many will share that with you if asked!
Step 4 – Use the whole firm. Many have devoted considerable resources to building their ‘support’ functions out to help clients get better results. Look to the pricing, legal project management and tech teams at the firms, not just the partners. They may well be able to deliver a more holistic solution than the front line team delivering actual legal advice.
I don’t think this process need be onerous.
Especially if you put in place a system to gather the data consistently so you can then do the assessment with everything at your fingertips.
Just like in the rest of your business, getting your (legal) supply chain right can really drive results.
2-hour delivery,
Christopher Thurn
Founder – Alacrity Law
(1) Tim Cook ran Aapple’s supply chain from 1998 – 2011 when he took over as CEO (https://en.wikipedia.org/wiki/Tim_Cook)
